Update: TI Fluid Systems

One of this column’s favourite aphorisms is that “a bad stock in a good sector will tend to outperform a good stock in a bad sector” and we may have erred in ignoring this in the case of TI Fluid Systems. However,

the valuation is low enough, at around seven times forecast earnings, and the yield plump enough, at 4.6pc for 2019, to merit support for now.

The automotive systems and technology firm’s expertise in heat management and pressurised fuel tanks could make it a long-term winner as car demand tilts toward hybrid and electric vehicles, not a loser as the valuation implies.

But in the short term, the news on global automotive demand remains unremittingly grim. This was reflected in this month’s interims, when sales fell by 3pc and adjusted operating profit by 14pc, and management’s assertion that sales would continue to outperform global car output growth, excluding the impact of currency movements, fell on deaf ears as the shares skidded lower.

Investors will have to buckle up as the stock is likely to be volatile, but there is still long-term potential and yield support here. Hold.